All posts tagged great wolf

On Wednesday, Great Wolf amended its regulatory disclosures in connection with Apollo’s $7.85 per share cash tender offer. The filing was made in accordance with the settlement of shareholder litigation. Readers of this column will know that I don’t think much of this type of “disclosure-only settlement” which seems to me to be an excuse to pay fees to the plaintiffs’ lawyers. This settlement has an additional feature which might be called “closing the barn door after the horses have left,” but we will come back to that.

Shareholders shouldn’t get excited about the new disclosures since there is likely nothing they can do with them at this point. Yet they are of interest because some of them indicate that Apollo and Great Wolf were very aggressive on deal protections (intended to discourage some post-signing competing bidders), the extent of which was not previously fully disclosed. And another change indicates that a Deutsche Bank valuation description wasn’t quite right as earlier described.

Private-equity firm Apollo Global Management LLC has prevailed in a bidding war for indoor-water-park operator Great Wolf Resorts Inc.

Over the last month, Apollo had been in an intense battle with another private-equity outfit, KSL Capital Partners LLC, for the Madison, Wis.-based company.

Great Wolf announced late Friday that KSL said it would not be submitting another bid. That leaves intact the agreement announced earlier Friday, in which Apollo will pay $7.85 a share for Great Wolf. Friday shares closed up 8.6%, or 64 cents, to $8.06 on apparent hopes KSL would up the ante once again.

The offer is now 57% higher than the originally agreed-upon price and 69% higher than the initial offer Apollo made to Great Wolf’s board in a non-public bidding auction.

The offer is an 87% premium to shares the day before the original offer went public and now values Great Wolf at $262.2 million.

But, showing investors still aren’t sure this is a done deal, shares jumped 7% to $7.94 in premarket trading.

When Apollo first struck a deal earlier this month for $5 a share the stock shot above the price and shareholders publicly lambasted the company for agreeing to the deal. Great Wolf had initiated a poison pill to stop a hostile bid the day it announced the Apollo deal.

KSL Capital, which specializes in resort properties, came in with an unsolicited offer of $6.25 and kicked off the back and forth. Each side raised it slightly until this week when Apollo only matched KSL’s $7 offer. It took less than a day for KSL to increase its offer and Apollo to then make the higher bid again. Apollo had been given until Tuesday night to respond to the latest KSL offer.

The latest Apollo agreement again increases the breakup fee if Great Wolf were to walk away, this time to $10.47 million. The breakup fee has been kept at about 4% of the total price.

Some 14 hours after Great Wolf announced it had re-negotiated and agreed to a new deal with Apollo Global Management in which Apollo would buy the water-park and resort operator for $7 a share, Great Wolf has a new offer from KSL Capital. KSL has offered $7.25 a share, which Great Wolf now considers a “superior offer” and has restarted the clock for Apollo, giving it another three business days before Great Wolf pulls the plug on the deal. Just last night it had looked as if Great Wolf was still leaning heavily toward Apollo, agreeing to a new deal that only matched, but didn’t top, KSL’s previous offer. Great Wolf also agreed to up the break-up fee it would pay Apollo if it walked. Apollo has until Tuesday at midnight to respond. You can bet there will be more news in this one.

Inching up on a deadline imposed by the resort and water-park operator set, Apollo Global Management and Great Wolf have struck another deal. Apollo will now pay $7 a share, matching a competing, unsolicited offer from private-equity firm KSL Partners that values Great Wolf at about $233.8 million.

It is the third time Apollo, which has dubbed the unit acquiring Great Wolf as K-9 Acquisition Inc., has answered the call of KSL’s higher bids. That follows Apollo’s initial agreed-upon offer of $5 a share in early March.

Earlier this week Great Wolf gave Apollo until midnight tonight to match or best KSL’s $7 offer, threatening to cancel the earlier agreement.

As part of the newest offer, Great Wolf also increased the break-up fee it would pay Apollo to $9.33 million from $9 million, about 4% of the total price.

Great Wolf says in its release that the offer is “in the best interest of all shareholders” though several shareholders have pointed to $8 or more as being possible.

While Great Wolf is certainly signaling its preference for Apollo, but this fight might have more rounds to go.

The water-park resort operator is prepared to cancel its current deal with Apollo Global Management, it said late Sunday, unless the private-equity group matches a higher offer from KSL Capital Partners.

Great Wolf isn’t accepting the latest $7 a share offer from KSL, but says it now must assure shareholders of a transaction that is “no less favorable.” Apollo has until just before midnight on Wednesday to respond and investors appear ready for more bids.

Spokeswomen for Apollo and KSL declined to comment. A Great Wolf spokesman didn’t immediately respond to requests for comment.

Investors in Great Wolf appear to be looking for that great white knight.

Associated Press

Although the hotel/water-park/family vacation operator on Tuesday announced a deal with private-equity giant Apollo this week, some shareholders think the bid — $5 a share — wasn’t high enough.

Shares shot even higher, closing at $5.32 and are up slightly again on Wednesday.

“We believe the opportunity for greater value is there,” said Richard Nackenson, portfolio manager of Neuberger Berman’s Multi Cap Opportunities Fund which owns 5% of Great Wolf. “I would be happy with a higher bid, I would be happy with this to continue operating as a publicly traded entity.”

Nackenson said the stock could be worth $8 or $9 based on conservative valuations on the company’s 2013 free cash flow and earnings before interest, taxes, depreciation and amortization.

He said the diligence his fund did before investing last year left him confident that Great Wolf’s debt was passed the distressed point. The covenants on the debt “are written to protect the credit holders which in this case really helps the equity holders,” Nackenson said.

Hilliard Lyons analyst Jeffrey Thomison cut the stock’s rating to hold from long-term buy amid the rally, signally he doesn’t see it wise to bet on higher bids coming at this moment. Still, he noted the transaction value “is a bit lower than we would have anticipated.”

The market’s exuberance for the stock came even as Great Wolf initiated a poison pill Tuesday and as Great Wolf’s board unanimously recommended the merger saying it is the “best way to maximize value for shareholders.”

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Dealpolitik is Ronald Barusch's strategic look at deals currently making the headlines as well as the major forces at work in the deal-making world. He was a M&A lawyer with Skadden, Arps, Slate, Meagher & Flom for over 30 years. He retired in 2010 after 25 years as a partner at the firm. Click here for his current and archived columns.